Sappi Limited · JSE:SAP
Sappi — Investor Day (June 2012)
134 slides from Sappi's investor day presentation, Jun 12, 2012
Slide 1: Investor Day - Cloquet Mill Visit
Investor Day - Cloquet Mill Visit Ralph Boëttger 12 June 2012 Investor Day - Cloquet Mill Visit
Slide 2: Forward looking statements
Forward looking statements Certain statements in this release that are neither reported financial results nor other historical information, are forward-looking statements, including but not limited to statements that are predictions of or indicate future earnings, savings, synergies, events, trends,
Slide 3: Group Overview, Strategy, Q2 2012 Results, Conclusions
• Group Overview • Strategy •Q2 2012 Results •Conclusions | Investor Day - Cloquet Mill Visit | 12 June 2012
Slide 4: Who We Are
Who We Are Global presence enables Sappi to take advantage of opportunities where markets are strong 8 Paper Mills 3 Paper Mills 1 Fine Paper Mill (JV) 13 Sales offices on 6 5 Paper Mills continents 1 Chemical Cellulose Mill 567,000ha Forests Coated fine paper Uncoated fine paper 13% 8
Slide 5: Strategy
Strategy | Investor Day - Cloquet Mill Visit | 12 June 2012
Slide 6: 2012 summary to date
2012 summary to date • Good start to 2012 • European performance commendable in tough environment • Excellent SA Chemical Cellulose performance • Continued underperformance of SA paper operations – restructuring benefits 2H 2012 • North America recovering from operational issues and lower pulp price
Slide 7: Strategic Overview
Strategic Overview • Refined strategy with emphasis on value creation for shareholders – results dropping through to bottom line • Focus • Debt reduction and cost of debt – shareholder value • Increasing importance of growth • Internal actions to improve EU and SA • Benefits in Europe are clear • Be
Slide 8: Strategy
Strategy Four key elements • Improving Europe and South Africa, starting to see results • Maintain performance in NA and Chemical Cellulose, focus on production • Invest in high growth & margin businesses with leading positions • Chemical cellulose – focus on contracting volumes and spread of custom
Slide 9: 2nd Quarter 2012 Results
2nd Quarter 2012 Results | Investor Day - Cloquet Mill Visit | 12 June 2012
Slide 10: Q2 2012 Summary
Q2 2012 Summary • Profit for the period US$58 million (Q2 2011 loss US$74 million) • EPS 11 US cents (Q2 2011 loss per share 14 US cents) • Net cash generated US$91 million (Q2 2011 US$100 million) • Net debt US$2,133 million, down US$42 million from Q1 2012 • Cost savings led to improved performanc
Slide 11: Operating Profit excluding special items
Operating Profit excluding special items* 2009: $33m 2010: $339m 2011: $404m *Refer to the supplementary information in this presentation for a reconciliation to reported operating profit and page 17 in our Q2 2012 results booklet for a definition of special items. **Q1 2011 included an extra week 1
Slide 12: EBITDA trend
EBITDA* trend 2009: $431m 2010: $752m 2011: $821m *Refer to the supplementary information in this presentation for a reconciliation to reported operating profit and page 17 in our Q2 2012 results booklet for a definition of special items. **Q1 2011 included an extra week 12
Slide 13: EBITDA trend
EBITDA* trend Q2 ‘12 Margins: S-Africa 13.9% N-America 6.8% Europe 5.5% *The divisional operating margins exclude special items. Refer to page 17 in our Q2 2012 results announcement booklet for a definition of special items. 13
Slide 14: Net Debt Development
Net Debt Development Rights Offer to finance Repaid $140m European Acquisition European Acquisition South African debt completed US$ m 3,000 Major Refinancing completed 2,500 2,000 1,500 1,000 Q111 Q110 Q109* Q211 Q311 Q411 Q112 Q209 Q309 Q409 Q210 Q310 Q410 Q212 * Cash proceeds of US$536m for Europ
Slide 15: Debt Maturity Profile
Debt Maturity Profile * Cash proceeds of US$536m for European Acquisition from rights offer not offset against debt 15
Slide 16: Conclusions
Conclusions | Investor Day - Cloquet Mill Visit | 12 June 2012
Slide 17: Strategic Overview
Strategic Overview • Absolutely focused on shareholder wealth creation • Growth plans progressing well – realistic expectations and confidence in our track record. No other major projects in the next few years • Fixing our EU and SA businesses an on-going process, minimise cash expenditure and take
Slide 18: Conclusion
Conclusion • We have a sound strategy • We believe in what we are doing • Traction on actions to date • World is uncertain • Totally committed to achieving more wins and accelerating value creation for shareholders through improved profit, strategic positioning and debt reduction | Investor Day - Cl
Slide 19: Inspired by life
Inspired by life | Investor Day - Cloquet Mill Visit | 12 June 2012
Slide 20: SFPNA Overview
SFPNA Overview Presented by Mark Gardner 20
Slide 21: Leading North American Producer of Coated Paper, Pulp and Specialties
Leading North American Producer of Coated Paper, Pulp and Specialties F2011 Net Sales: $1,520M F2011 EBITDA: $203M Two integrated coated freesheet mills, specialty paper mill and dedicated sheeting center 1.2M metric tons of paper production capacity 1.0M metric tons of pulp production cap
Slide 22: Key Advantages
Key Advantages • Well invested, premier asset portfolio with fully integrated facilities • Established brands with strong market position • Exposure to most attractive end-market segments • Unmatched reputation for product innovation and customer service • A low cost producer with strong free cash f
Slide 23: Premier Asset Portfolio
Premier Asset Portfolio Shared Services Facility Maine Somerset Mill Maine Cloquet Mill 795,000 tons coated fine paper Minnesota 525,000 tons pulp 330,000 tons coated fine paper Allentown 455,000 tons pulp Sheeting Facility Pennsylvania 100,000 tons Westbrook Mill sheeting capacity Maine 35,000 tons
Slide 24: Consistent Operational Performance and Continuous Improvement
Consistent Operational Performance and Continuous Improvement • Track record of year over year productivity improvement in both pulp and paper • Successful product redesign – commercialization of Flo sheets and web • Significant reduction in energy cost through capital investment and fuel management
Slide 25: SFPNA Has Driven Improvements Through Selected Investment and Strategic Actions
SFPNA Has Driven Improvements Through Selected Investment and Strategic Actions Approved Grade change Shut Somerset Pulp Chemical Rebuild SPM1 Cellulose and optimization Muskegon Mill Upgrade Somerset PM3 rebuild 2006 2007 2008 2009 2010 2011 Significant Product and Right sized fixed Emerged from Ac
Slide 26: Financial Performance
Financial Performance 140 16% 120 14% 100 12% 10% 80 8% 60 $Million RONOA 6% 40 4% 20 2% - 0% (20) -2% (40) -4% FY06 FY07 FY08 FY09 FY10 FY11 Operating Income RONOA 26
Slide 27: SFPNA Strategy for Growth
SFPNA Strategy for Growth Coated • Grow operating profit through improved product and customer mix • Implement e-Business solutions to take time and cost out of the value chain • Invest in our paper machines to keep them modern and globally competitive Pulp • Invest $170M in Cloquet pulp mill to con
Slide 28: Business Overview - Coated
Business Overview - Coated 28
Slide 29: Our Market Segment – Coated Freesheet
Our Market Segment – Coated Freesheet Coated Free Sheet Image Susceptibility to quality, Coated Online Substitution heft/feel, Groundwood opacity and price Super-Calendered 29 Investor Day - Cloquet Mill
Slide 30: Improvement in Both Coated EBITDA Margin and Market Share
Improvement in Both Coated EBITDA Margin and Market Share 12% 27% 10% 25% 8% 23% 6% 21% 4% 19% 2% 17% 0% 15% F06 F07 F08 F09 F10 F11 EBITDA Margin Market Share • EBITDA margin improvement driven by improved customer and product mix, more focused brand positioning and cost management • Market share r
Slide 31: Outlook for NA CFS Demand
Outlook for NA CFS Demand • While consumption will slowly decline with widespread adoption of e- devices, CFS less impacted than other grades due to flight to quality • CFS will remain a vibrant part of the media mix due to its unique value in establishing brand recall and trust • SFPNA further adva
Slide 32: Agenda
Agenda Business Overview - Pulp • Overview of SFPNA • Business Overviews and Strategic Considerations – Coated – Pulp – Release 32
Slide 33: Pulp Business – Competitive Advantages
Pulp Business – Competitive Advantages • Sappi NA pulp mills are top tier and among the newest pulp mills in North America – Somerset 1976 525K MT – Cloquet 1999 455K MT • Located near: – Quality wood baskets – Customers • Flexible production – Softwood and differentiated co-pulp at Somerset – Aspen
Slide 34: Chemical Cellulose Conversion Overview
Chemical Cellulose Conversion Overview • Convert Cloquet pulp production to 330K metric tons per year of chemical cellulose from kraft paper pulp (455K tons) • $170M of capital with strong returns • Target segment will be viscose staple fiber (VSF) – demand projected to grow by 8% per year – Potenti
Slide 35: Chemical Cellulose Global Supply Cost Curve
Chemical Cellulose Global Supply Cost Curve World Chemical Cellulose Cash Cost Curve Average Cash Cost • While significant capacity expansion announcements have been made, all three of Sappi‟s mills will be at the low end of the cost curve 35
Slide 36: Business Overview - Release
Business Overview - Release We make texture…..texture makes the difference 36
Slide 37: Insert picture of the peel sample
Insert picture of the peel sample (which will be handed out) 37
Slide 38: Release Market Overview
Release Market Overview RELEASE CASTING LAMINATING TECHNOLOGY EXTENSIONS COATED ENGINEERING DECORATIVE IN-PRODUCT TRANSPORTATION FABRICS FILMS LAMINATES APPLICATIONS • Brown Shoes • Automotive • Insulation • Laminate floors •Flexible Displays • Hand Bags • Trucks • Foams • Furniture •Printed Electro
Slide 39: The Global Release Market – Casting and Laminates
The Global Release Market – Casting and Laminates End-Uses Ultracast 99% Ultracast Price Pattern Fidelity Share $7,000 - $12,500 100% per ton Ultracast 9,600 T Polypropylene Polypropylene Price Pattern Fidelity Polypropylene $4,500 - $10,000 75% – 90% per ton 11,900 T Classics Classics Price Pattern
Slide 40: Competitive Advantage - Release
Competitive Advantage - Release • Ultracast – Provides100% replication of any pattern Superior to the competition (Classics at 50%, Polypropylene at 90%) – Maintains pattern fidelity over multiple reuses (10 – 20 passes) Superior to competition which begins to degrade in 4 – 5 passes (polypropyl
Slide 41: SFPNA Key Advantages
SFPNA Key Advantages • Well invested, premier asset portfolio with fully integrated facilities • Established brands with strong market position • Exposure to most attractive end-market segments • Unmatched reputation for product innovation and customer service • A low cost producer with strong free
Slide 42: Thank you
42 Thank you sappi
Slide 43: Sappi Chemical Cellulose
Sappi Chemical Cellulose Gary Bowles June 2012 43 Analyst Presentation | 05 June 2012
Slide 44: Sappi and Chemical Cellulose
Sappi and Chemical Cellulose Sappi is the Global leader in chemical cellulose High Growth and high margin business Success (both past and future) based on 3 key elements • Low cost manufacturing and distribution • Long term contractual commitments • Specialised knowledge and customer support 44 Anal
Slide 45: What is Chemical Cellulose?
What is Chemical Cellulose ? • Cellulose is a natural organic polymer chain found in all plant materials • The plant material (wood from certified forests or plantations) is processed and purified by applying specialised chemistry to extract the cellulose chains within the wood • The purified natura
Slide 46: Chemical Cellulose Specialisation
Chemical Cellulose Specialisation Market Pulp Industry Chemical Cellulose Industry Total : 55 Million Tons Total : 5 Million Tons Chemical VSF Cellulose Lyocell Fluff Acetate MCC Market Pulp Ethers Others Increasing specialisation 1M Cotton Linters 46 Analyst Presentation | 05 June 2012
Slide 47: Specialised knowledge and customised quality
Specialised knowledge and customised Quality VSF Cooking Bleaching Final Pulp Cellophane End Uses Furnish Lyocell MCC Ethers Acetate Chemical cellulose performance is determined by both the wood and the manufacturing process 47 Analyst Presentation | 05 June 2012
Slide 48: Process & Product Complexity
Process & Product Complexity • Many factors have an influence on the performance & application of CC – Wood source (softwood/hardwood/ species; age, season, soil, climate) – Process type (cooking / digesting and bleaching) – Sheet structure (physical and chemical impacts) • Every CC pulp will have u
Slide 49: What is Chemical Cellulose used for?
What is Chemical Cellulose used for ? Wear Beautify Eat & Drink Wrap Wash & Wipe R&R Heal & Hygiene Communicate Mend Filter ellulose hemical 49 Analyst Presentation | 05 June 2012
Slide 50: Chemical Cellulose Supply Inputs
Chemical Cellulose Supply Inputs Dissolving Wood Pulp Cotton Linter Pulp Supply 5.8m tons 2011 Including Sappi Chemical Cellulose Mostly China 4.8 m tons 1 m tons 50 Analyst Presentation | 05 June 2012
Slide 51: What do our Customers Make?
What do our Customers Make ? VSF Lyocell MCC Acetate Others CMC/ethers Cellophane Filament Tyre cord Nitrocellulose Plastics Sponges 51 Analyst Presentation | 05 June 2012
Slide 52: Fibre Value Chain
Fibre Value Chain Wood Pulp Cellulosic Textiles Fibers Fabrics End-use Products Retail Nonwovens End-use Products Retail • Beech • Dissolving • Viscose • Woven • Apparel • Eucalyptus Woodpulp • Lyocell • Knitted • Home Textiles • Wattle Producers • Modal • Tufted • Carpets • Spruce • Industrial • As
Slide 53: Global Chemical Cellulose Demand – 2011
Global Chemical Cellulose Demand – 2011 Others 14% Cellophane 1% VSF Ethers/CMC 58% 9% Acetate 13% MCC 2% Lyocell Total = 5m tons 3% Sappi = 0.8 m tons = 15% Source: Sappi/Various 53 Analyst Presentation | 05 June 2012
Slide 54: Viscose Staple Fibre Segment
Viscose Staple Fibre Segment Used for making clothes, home-furnishings, non-wovens (wipes, feminine hygiene products ) 54 Analyst Presentation | 05 June 2012
Slide 55: Estimated 2011 Textile Fibres Consumption Split
Estimated 2011 Textile Fibres Consumption Split Total Market Demand ± = 79.1m tons 74m tons 55 Analyst Presentation | 05 June 2012 Source: PCI Fibres/Sappi/Gherzi
Slide 56: Key Demand Drivers for Textiles
Key Demand Drivers for Textiles • Population growth- Global population from a current 6.9 billion to 8.3 billion by 2030 and per capita consumption • Increasing need for clothes and food • Increasing need for more comfortable clothing • Rising urbanization and standard of living in the Greater Asian
Slide 57: Demand Growth Drivers - Cotton
Demand Growth Drivers - Cotton • Total arable land loss • Better crop management,• Net effect of land > 10 m ha p.a. GMO‟s - improving crop acreage loss vs. • Last 60 yrs cotton yields increase in cotton yield is that global crop area down 29m • Current yield ± 800kg / ha production is estimated to
Slide 58: Share of Historical & Future Fibre Production
Share of Historical & Future Fibre Production • Production of cotton is forecast to remain stagnant or shrink Fibre Production Million • Growth in total fibre Metric Tons 140 consumption will be Wool 120 Forecast covered by man-made Cotton 100 fibres Man-made Cellulosic 80 • However certain moisture
Slide 59: Chemical Cellulose Market Leadership
Chemical Cellulose Market Leadership Global Top 5 Chemical Birla & Lenzing Cellulose Producers intergrated excl. Domsjo Domsjo 4% Others 2011 (Est.) % Capacity Tembec incl. Tartas 10% 21% 5% Borregaard 3% Sappi Birla RGE Rayonier CLP China Saiccor Tembec 14% 16% Weyco Rayonier PT Toba 2% Others 47%
Slide 60: New Capacity and Sappi's Position
New Capacity and Sappi‟s Position • +- 1m ton of new capacity per annum until 2014 is expected – A number of paper grade conversions – Almost all directed at China – Some speciality conversions/expansions – Rayonier, Buckeye, Bahia • Sappi‟s competitive response is premised on three pillars – Secure
Slide 61: World Cotton Price and CC grade Viscose Pulp Price
World Cotton Price (A-Grade) and CC grade Viscose Pulp Price : Delivered to China (US$/Tonne) Competitive Investments Decisions by high cost producers? 4200 Viscose Cotton 3800 3400 3000 2600 2200 1800 1400 1000 600 200 00 02 04 06 08 10 12 14 16 61 Analyst Presentation | 05 June 2012
Slide 62: Competitor Cost Comparison
Competitor Cost Comparison World Competitor CC Cash Costs into VSF based on 80% of supply volumes Below Average Cost Above Average Cost Sappi = 27% 45% + 25% Others = 28% Average Cash Cost - 30% 62 Analyst Presentation | 05 June 2012
Slide 63: Sustainability
Sustainability To embed the 3Ps of Prosperity, People, and Planet into our business processes, to add value to all stakeholders, and to help achieve the goal to be, on a sustainable basis, the most profitable company in paper, pulp and cellulose-based solutions. Timber sourcing for all CC operations
Slide 64: Saiccor Chemical Cellulose Mill
Saiccor Chemical Cellulose Mill • CC capacity of 800,000 tpa – largest single site globally • Falls within the bottom quartile of the competitor cost curve – Cost of growing fibre / growth rates – Proximity of forests to Saiccor – Good logistics to main markets – Multi line operational flexibility –
Slide 65: Ngodwana Chemical Cellulose Project
Ngodwana Chemical Cellulose Project • Planned CC capacity of 215,000 tpa from 2013 • Falls within the bottom quartile of the competitor cost curve – Cost of growing fibre / growth – Proximity of forests to Ngodwana – Good logistics to main markets • Project time line – All major contracts concluded
Slide 66: Cloquet Chemical Cellulose Project
Cloquet Chemical Cellulose Project • Cloquet is NA‟s newest and most modern pulp mill – 1999 • Produces 450,000 tons per year of paper pulp • Estimated VSF CC capacity of 330ktpa, start up 01 June 2013 • Only super batch system in NA • Excellent Safety and Quality performance • Certification • OHSAS
Slide 67: Technical Support for Global CC business
Technical Support for Global CC business Analytical Services Process Support Digester and membrane plant Bleach reactor Product support 67 Analyst Presentation | 05 June 2012
Slide 68: Innovative Solutions inspired by the Chemistry of Trees
Innovative Solutions inspired by the Chemistry of Trees • Strong Technical Partnerships with our customers • Customer-driven R&D • World Class Know-how on cellulose applications • Supplier to Viscose Sector for over 50 years • Specialised pulp testing methods and equipment • End –use process & produ
Slide 69: Conclusion
Conclusion • Real CC demand growth is forecast • Sappi‟s CC strengths are: • Secure and sustainable wood baskets • Very competitive cost positions • Business model anchored on long term contracts with leading customers and minimal spot business • Strong and mature customer relationships • Supply Fle
Slide 70: Thank You
Inspired by life Thank You 70 Analyst Presentation | 05 June 2012
Slide 71: Print in the New Media Mix
Print in the New Media Mix Daniel Dejan SFPNA ETC Print & Creative Manager 71 | Investor Day - Cloquet Mill Visit | | 12 June 2012
Slide 72: Where once Print was One of the Big Three now we split the share
Where once Print was One of the Big Three now we split the share Email Internet: www Total Media Budget Social Networking Mobile Media Print‟s share eInk, ePaper & Tablets Satellite Radio/PodCasting Viral Marketing 72 | Investor Day - Cloquet Mill Visit | | 12 June 2012
Slide 73: Disruptive Technology
“Disruptive Technology” • Desk-top Publishing – Redefines graphic design, print production & implementation, archiving and content distribution • World Wide Web 2.0 – Uploading music, videos, opinions • Digitalization of Communications – iTunes redefines Music distribution model – Variable Digital P
Slide 74: What is the Value of Print?
What is the Value of Print? Print Offers Good Measurement • Especially for coupons, codes, specific offers and unique links* • Print has a high response rate* Consumers Like Print • 70% of Americans, including 69% of 18 to 24 year olds, state they prefer to read print and paper communications, rathe
Slide 75: Make Media Buyers Aware
Make Media Buyers Aware Print is less intrusive than broadcast Print motivates consumers to quicker responses and actions Print translates into more brand awareness and brand loyalty - Yankelovich 75 | Investor Day - Cloquet Mill Visit | | 12 June 2012
Slide 76: Reinforce to Media Buyers
Reinforce to Media Buyers Print is not the lowest-cost provider Print has the most favorable ROI/ROC Print continues to be the most efficacious media for Branding Mnemonic retention Sales, merchandising and marketing ROI Highest trust quotient 76 | Investor Day - Cloquet Mill Visit | | 12 June 2012
Slide 77: Print a key component of media spend
Print a key component of media spend 250 225 226 219 217 211 199 204 195 Direct mail projected to 200 48 53 49 51 grow 2.6% per year 2011- 50 2014 48 49 15 47 7 18 Internet will grow 17% 150 7 35 42 per year 2011-2014 off of 21 26 30 20 23 smaller base $ Billion 19 7 7 7 8 8 8 16 16 16 17 17 18 100
Slide 78: What is the Value of Print?
What is the Value of Print? Direct Mail surprisingly transcends the age demographic** Younger consumers (the 18- to 34-year-old demographic) prefer to learn about marketing offers via postal mail rather than online sources Conveying trust Consumers say the most trustworthy channels are newspapers (2
Slide 79: Increasing Response Rates
Increasing Response Rates 1 2 5 Plus Static, Personalization B&W Plus Variable 44% Content .46% 500% 3 4 Personalization Plus Plus Colour Colour 45% 135% Web-to-Print Source: Romano & Broudy 79 | Investor Day - Cloquet Mill Visit | | 12 June 2012
Slide 80: Key Influences in Determining Media Choice
Key Influences in Determining Media Choice How the customer wants to receive messaging Direct mail continues to be consumers‟ preferred means of receiving marketing messages from brands* Across all key verticals - from financial and insurance to retail and personal care – direct mail is preferred ov
Slide 81: How Does Print Play with Other Media?
How Does Print Play with Other Media? Adding direct mail to a marketing campaign increases return on investment by 20%.* – Outdoor was 44% more successful with print – Online components, 62% more successful with print Social media pairs well with print as a message amplifier and a link between demog
Slide 82: What is the Value of Print?
What is the Value of Print? Direct Mail Delivers Strongest ROI for B2C For customer contact and retention, direct mail (37%) delivered the best ROI, followed by email (31%) For customer acquisition, direct mail (34%) topped email (25%) Source: Target Marketing, Media Usage Forecast 2012, February 29
Slide 83: Key Influences in Determining Media Choice
Key Influences in Determining Media Choice How the customer wants to receive messaging Print advertising most influences consumer store and shopping choices The media sources shoppers rely on most for sales and product info Direct mail (67%) Email (67%) Social media (45%) Store‟s website (37%) Store
Slide 84: How Does Print Play with Other Media?
How Does Print Play with Other Media? Google Uses Direct Mail to Sell On Line Advertising Google's spending on traditional ads jumps four-fold Spent approx $213 million on ads in traditional U.S. media last year One of the largest direct mailers globally Uses direct mail to attract new clients and g
Slide 85: Offset Printing, Tablets, Variable Data Printing
Offset Printing Tablets Variable Data Printing Mobile Media Websites Social Media 85 | Investor Day - Cloquet Mill Visit | | 12 June 2012
Slide 86: Content is King…
Content is King… But it is Not FREE Courtesy of Condé Nast 86 | Investor Day - Cloquet Mill Visit | | 12 June 2012
Slide 87: Magazine readers spend 45 minutes per issue
Mediamark Research Inc. (MRI) found magazine readers spend an average of 45 minutes examining each issue. They also found that the top 25 magazines reach more adults than the top 25 television programs. 87 | Investor Day - Cloquet Mill Visit | | 12 June 2012
Slide 88: What is the Value of Print?
What is the Value of Print? Magazines rank #1 in driving purchase intent* • Magazines increased purchase intent five times as much as television or the internet • Whether alone or in combination with other media, magazines were the only medium to be ranked as most efficient at each stage of the purc
Slide 89: QR Codes in Direct Mail
QR Codes in Direct Mail …or use the Purl 89 | Investor Day - Cloquet Mill Visit | | 12 June 2012
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Slide 91: Tipped-in lenticular effect
Tipped-in lenticular effect Page 7 McCoy Silk, Text 100# McCoy Silk, Cover 80# 91 | Investor Day - Cloquet Mill Visit | | 12 June 2012
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Slide 96: Sappi Standard #5
Sappi Standard #5 McCoy Silk, Cover 80# 96 | Investor Day - Cloquet Mill Visit | | 12 June 2012
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Slide 100: Americans who shop from catalogs spend an average $151 per order
Americans who shop from catalogs spend an average $151 per order. Percentage of sales from… Paper Catalog – 46% eCatalog/Website – 36% Retail – 14% Other – 4% 100 | Investor Day - Cloquet Mill Visit | | 12 June 2012
Slide 101: Catalogue business quote
“As long as Amazon.com feels compelled to send out printed catalogues for its website, the catalogue business is not going to go away” Stefan Sagmeister 101 | Investor Day - Cloquet Mill Visit | | 12 June 2012
Slide 102: What is the Value of Print? Voice of the Customer
What is the Value of Print? Voice of the Customer – Interview Comments* Print is our number one advertising vehicle – the catalog is our brand Customers want to see product in magazine titles that they associate with their own lifestyle and that are prestigious Customer bases that are in the 45 - 60
Slide 103: Why Print Remains Relevant in Today's Media Market
Why Print Remains Relevant In Today’s Media Market Print is competitive in price/cost per view and return on investment, particularly as it is compared with mobile, social and television Print‟s biggest competitor in terms of cost and ROI is internet (excluding social) marketing Print spend is decli
Slide 104: Why Print Remains Relevant in Today's Media Market
Why Print Remains Relevant In Today’s Media Market Marketers do not see print „going away‟, but being used in a more targeted and specialized way Successful campaigns use multiple mediums -and data points to print as a component that should be included to maximize success As budget allocated to prin
Slide 105: Print engages all the senses
“Print engages all the senses of a reader and its tactile quality provides an added advantage which other media do not have” Jaques Lange 105 | Investor Day - Cloquet Mill Visit | | 12 June 2012
Slide 106: That's the Power of Print!
HOW CAN SOMETHING THAT DOES NOT MOVE BE SO MOVING? HOW CAN SOMETHING THAT MAKES NO SOUND SAY SO MUCH? THAT‟S THE POWER OF PRINT ! 106 | Investor Day - Cloquet Mill Visit | | 12 June 2012
Slide 107: www.sappi.com/LifeWithPrint
www.sappi.com/LifeWithPrint [email protected] 107 | Investor Day - Cloquet Mill Visit | | 12 June 2012
Slide 108: Thank you
Thank you 108 | Investor Day - Cloquet Mill Visit | | 12 June 2012
Slide 109: Welcome to Cloquet
Welcome to Cloquet Rick Dwyer June 2012
Slide 110: Mill History
Mill History 1898 Built as Groundwood Mill 1964 Merged with Potlatch 1989 PM12 and New Coater 1993 PM4 Rebuild 1999 New Pulp Mill 2002 Cloquet mill, and the coated business, purchased by Sappi 2004 PM12 Rebuild 2013 Begin Chemical Cellulose Production 110 Investor Tour | June 13, 2012
Slide 111: Safety
Safety 111 Investor Tour | June 13, 2012
Slide 112: Minimizing solid waste to landfill
Minimizing solid waste to landfill Cloquet Landfill Quantities 25 140000 115,000 120000 20.8 20 19.7 18.8 100000 15 14.9 14.6 80000 14.372,500 yd3 (or tons)/ year Landfill Life (yrs) 60000 10 8.2 40,000 35,000 40000 7.0 30,000 25,000 22,500 5 20000 121,000 125,000 126,000 95,000 51,111 45,749 43,733
Slide 113: Reduction in Greenhouse Gas Emissions
Reduction in Greenhouse Gas Emissions 1.00 0.90 0.80 0.74 0.70 0.65 ton CO2e/adt 0.60 0.55 0.50 0.46 0.43 0.39 0.40 0.30 0.24 0.25 0.26 0.21 0.22 0.21 0.20 0.10 0.00 FY2000 FY2001 FY2002 FY2003 FY2004 FY2005 FY2006 FY2007 FY2008 FY2009 FY2010 FY2011 113 Investor Tour | June 13, 2012
Slide 114: Cloquet: An Award-Winning Mill
Cloquet: An Award-Winning Mill 2007 National Pollution Prevention Roundtable Most Valuable Project Award 2006 Lake Superior Bi-National Program Environmental 2006 & 2009 Stewardship Minnesota Governor’s Award for Award Pollution Prevention For Outstanding Contribution to Protect and Restore the Lake
Slide 115: Cloquet Pulp Mill Overview
Cloquet Pulp Mill Overview • Pulp Mill constructed through the „90s • 8 displacement batch digesters • O2 delignification • ECF bleach plant • 1100 short tons per day pulp dryer • Liquor recovery cycle • Products: Maple, Aspen, Birch •Slush to the paper machines •Dried bales to the market 115 Invest
Slide 116: Annual Pulp Production Tons Trend
Sappi - Cloquet K Annual Pulp Production Tons Trend Short 2003 - 2012 tons 540 520 500 480 460 440 420 400 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 Bleached Pulp Note: 2012 is FC2 projection; 2005 & 2011 were adjusted to a 52-week year 116 Investor Tour | June 13, 2012
Slide 117: Cloquet Paper Mill Overview
Cloquet Paper Mill Overview • 2 CFS paper machines and 1 off machine coater offering premium quality, low cost and flexibility • PM4 produces 110# text through to heavy weight cover • PM12 produces 60# text up to 146# (light end of cover range) • Ability to shift covers between PM4 and PM12, and tex
Slide 118: Annual Paper Production Tons Trend
Sappi - Cloquet K Short Annual Paper Production Tons Trend tons 400 2003 - 2012 350 300 250 200 150 100 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 Sheets NSP 118 Investor Tour | June 13, 2012
Slide 119: Cloquet Headcount
Cloquet Headcount 1,052 FY '02 to May 2012 850 800 750 752 753 748 748 740 735 735 728 728 711 707 700 650 FY '01 FY '02 FY '03 FY '04 FY '05 FY '06 FY '07 FY '08 FY '09 FY '10 FY '11 May-12 119 Investor Tour | June 13, 2012
Slide 120: Investor Tour
120 Investor Tour | June 13, 2012
Slide 121: Cloquet Site
Cloquet Site Recovery Paper Woodyard Pulp Mill Boiler Machines Bleach Plant Pulp Dryer St. Louis River
Slide 122: Cloquet – Key Strengths
Cloquet – Key Strengths • High quality, low cost paper assets • Newest pulp mill in NA • Skilled workforce with culture of continuous improvement • Sound environmental record • Current site advantages translate to CC market 122 Investor Tour | June 13, 2012
Slide 123: Thank you
Thank you
Slide 124: Investor Day - Cloquet Mill Visit
Investor Day - Cloquet Mill Visit Deece Hannigan 124 | Investor Day - Cloquet Mill Visit | 13 June 2012
Slide 125: Project Athena
Project Athena • Conversion – Spring 2013 • 330K ADMT of Chemical Cellulose for the viscose market, from 450K ADMT of hardwood kraft extractives 5% lignin cellulose 20% 45% hemicellulose 30% 125 | Investor Day - Cloquet Mill Visit | 13 June 2012
Slide 126: Project Athena
Project Athena • $170M strategic investment • New debarking unit • 2 additional digesters • Pulp Mill Modifications − Bleach plant − Evaporators − Market pulp machine • Modify paper machines to run dry fiber 126 | Investor Day - Cloquet Mill Visit | 13 June 2012
Slide 127: Project Athena
Project Athena • Mill Pulp Integration – SFPNA will go from approximately 120% to 106% due to lower CC volumes versus kraft pulp • Cloquet pulp mill will retain kraft pulp production capability to provide maximum flexibility to market dynamics • We will still have low cost energy advantage 127 | Inv
Slide 128: Why Cloquet – low cost, renewable energy
Why Cloquet – low cost, renewable energy Steam and electricity Products: pulp paper Paper and Pulp Mill Paper Mill Market Kraft Pulp Kraft pulp Steam and electricity market pulp Products: paper More paper and Pulp Mill Paper Mill Dissolving Pulp = more profit Dissolving pulp
Slide 129: Why Cloquet – Assets
Why Cloquet – Assets • Newest pulp mill in NA – commissioned in 1999 • Relative ease to convert – Displacement batch cooking technology – Oxygen delignification followed by ECF bleaching – Well-matched capacities throughout pulp mill • Excess utilities capacity for steam, electricity, water and effl
Slide 130: Why Cloquet – Costs
Why Cloquet – Costs World Competitor CC Cash Costs into VSF based on 80% of supply volumes Below Average Cost Above Average Cost Sappi = 27% 45% Others = 28% + 25% Average Cash Cost - 30% 130 | Investor Day - Cloquet Mill Visit | 13 June 2012
Slide 131: Why Cloquet – Costs
Why Cloquet – Costs • Five hardwood kraft conversions to Chemical Cellulose Mill Door Cash Cost RISI – June 2012 Cloquet Comp 1 Comp 2 Comp 3 Comp 4 131 | Investor Day - Cloquet Mill Visit | 13 June 2012
Slide 132: Why Cloquet – People
Why Cloquet – People • Well trained and motivated workforce • Mill history of continuous improvement in all measures of a well managed mill – Safety, environmental, productivity and cost control – Allows us to be competitive even with disadvantaged freight costs • Mill history of successfully delive
Slide 133: Sappi Strength
Sappi Strength • Sappi is established in the Chemical Cellulose business –Global leader – 800K over 1.3M ADMT of capacity –Low quartile cost • Sappi experience –Decades of experience manufacturing CC and understanding its performance in downstream markets –Centre of Excellence • Sappi reputation w
Slide 134: Thank you
Thank you 134 | Investor Day - Cloquet Mill Visit | 13 June 2012